Underwriters to Lend Twitter $1 Billion

The banks underwriting Twitter Inc.’s upcoming initial public offering have officially agreed to lend it as much as $1 billion over the next five years, according to a new filing with regulators.

The $1 billion revolving credit facility, which was completed this month and will mature in October 2018, was detailed in an updated Securities and Exchange Commission filing late on Tuesday. The credit discussions had previously been reported by The Wall Street Journal and other media outlets.

The San Francisco-based microblogging service will pay an interest rate on any money it borrows ranging from 1 to 1.75 percentage points over the London interbank offered rate, or Libor, the rate at which banks lend to each other, the filing said. The rate depends on how much Twitter has borrowed versus how much cash profits it generates.

It is unusual for young technology companies to be able to borrow such large sums, but Twitter — like other recent Internet companies going public – has been able to secure funds from banks that have competed hard to win its business.

The company is expected to pay just 3.25% of the money it raises in the IPO to the banks, people familiar with the discussions have said. That would be the lowest rate for a technology company since Facebook Inc. last May, which paid 1.1%. Twitter is currently set to raise $1 billion, but that could change once the company begins shopping its shares directly to investors.

The share deal is expected to move forward in the next few weeks, the people familiar have said.

Morgan Stanley and J.P. Morgan Chase are both contributing $250 million to the credit line, and Bank of America and Deutsche Bank are putting up $175 million each, according to the filing. Goldman Sachs is contributing $150 million, the filing said.

Goldman is leading Twitter’s IPO, with Morgan Stanley and J.P. Morgan also in senior roles on the deal. Bank of America Merrill Lynch and Deutsche Bank, and boutique firms Allen & Co. and Code Advisors, are also underwriting the offering.